Investing in Thorough and Efficient Public Education

For almost five decades, all three branches of New Jersey’s government have wrestled with inequities in the state’s system for financing public schools.

In 1970, Jersey City challenged the state’s school funding system on behalf of an 11-year-old African-American boy named Kenneth Robinson. The suit argued that an overreliance on property taxes to pay for public schools had led to large spending disparities that deprived students in low-wealth communities of their constitutional right to a “thorough and efficient” public education.8 In more than 25 decisions, starting with Robinson v. Cahill (1973-76) and continuing with the landmark Abbott v. Burke case (1985-2017), the state Supreme Court repeatedly required the governor and the Legislature to provide funding sufficient to ensure that disadvantaged students received the programs and support services they needed to succeed in school.

The Robinson and Abbott cases forever changed New Jersey’s educational landscape. Court rulings forced an often-reluctant Legislature to enact the state’s first income tax, guarantee a free preschool education to tens of thousands of young children, and commit hundreds of millions of dollars to rebuilding the educational infrastructure in cities.

Thus, in 1997, after years of legislative resistance to full-funding mandates, the Court ordered the state to take immediate action to bring spending levels in 31 of the state’s poorest urban school districts, known as the “Abbott districts,” up to the level of spending in the most affluent suburbs.9 In 1998, on top of parity funding for the regular education program, the Court required the state to pay for supplemental programs—including preschool for three- and four-year-olds, full-day kindergarten, intensive early literacy instruction, and social and health services—and to cover the full cost of repairing or replacing aging city school buildings.10 With that funding, the Abbott districts hired vice principals, tutors, basic skills teachers, guidance counselors, social workers, security staff, and instructional aides; enrolled nearly 50,000 young children in preschool; and built or renovated more than 100 schools.11

In the years that followed, those investments began to pay off. Gaps between the test scores of Abbott district students and those of students in the rest of the state narrowed12; on the National Assessment of Educational Progress, often called “the nation’s report card,” New Jersey’s low-income and African-American eighth graders showed improved educational achievement.13

Throughout the Abbott litigation, the Supreme Court had repeatedly asked the Commissioner of Education to determine precisely what services disadvantaged children needed for success in school and to calculate the cost of providing those services. Finally, in 2008, after years of research and study, the state enacted a new formula, codified as the School Funding Reform Act of 2008 (SFRA).14 SFRA aimed to convert the school funding system from a “dollar-driven” model that defined educational adequacy in terms of money spent to a “standards-linked” model that defined adequacy in terms of the state’s core curriculum content standards, the benchmarks for what children should know and be able to do after 13 years of public schooling.

In its 2009 Abbott XX ruling, the Supreme Court found SFRA constitutional and accepted the funding obligations set forth in the statute as a replacement for the parity remedy in the Abbott districts. The Court continued to mandate state funding for preschool and the school building program in the Abbott districts. “The State has constructed a fair and equitable means designed to fund the costs of a thorough and efficient education,” the Court wrote. After decades of litigation, New Jersey had “reach[ed] the point where it is possible to say with confidence that the most disadvantaged school children in the State will not be left out or left behind.”15

SFRA, which directed significantly greater resources to students and school districts with greater needs, was designed to maintain equitable funding in high-poverty districts while advancing equity statewide. The statute achieved these goals in two important ways: through a weighted student funding formula and through a significant expansion of the Abbott preschool program.

A weighted formula begins by setting a “base cost”: the per-pupil funding amount necessary to deliver the core educational program. Then the formula defines the extra costs of programs for low-income (“at-risk”) students and limited English proficiency (LEP) students, calculating each of these extra costs as a percentage of the base cost, known as “weights.” A district’s “adequacy budget”—the amount of money necessary to deliver the core educational program, plus additional services, to all its students—is calculated by multiplying the base cost by an enrollment number adjusted upward to account for students’ extra needs. The portion of the adequacy budget that must be paid out of local property taxes (the “local share”) and the portion that will be covered by state funding (“equalization aid”) depends on a district’s property wealth and level of personal income, with more affluent districts covering a greater proportion of school costs locally.

SFRA also envisioned a broad expansion of the well-regarded Abbott preschool program to serve disadvantaged children outside the 31 Abbott districts. Free preschool was to be offered to all three- and four-year-olds in another 109 high-poverty districts,16 and to all low-income children living outside those districts as well. Finally, the law required the governor and the state Commissioner of Education to evaluate the formula every three years and recommend adjustments to the Legislature.

Although the SFRA formula passed constitutional muster, the Supreme Court conditioned its approval on two key criteria. First, the Court ordered that the state fully fund the formula during the first three years of implementation and, second, the Court ordered the state to “diligently” review its progress after those first three years and “adjust the formula as necessary based on the results of that review.”17

Neither of the Court’s conditions has been met.

FUNDING THE SFRA FORMULA

Although the state provided the funding required by the SFRA formula in 2008–09, in 2009-10 the state did not provide the $800 million mandated under the SFRA. That reduction was compounded in 2010–11, when $1.1 billion in school aid was eliminated from the budget and the increase of $500 million required by the formula was not appropriated. When the Abbott plaintiffs returned to the Supreme Court in 2011, it ruled that the state had deliberately violated Abbott XX’s “express mandate” of three years of full funding.18 The Court ordered the administration to provide aid for the 2011–12 school year in accordance with the SFRA formula but only for the 31 Abbott districts in the case before the Court whose welfare had been the subject of so many years of litigation.19

For six years after the 2011 ruling, state aid levels were essentially frozen. There were no increases for student population growth, no cost-of-living adjustments, no funding for preschool expansion, and only $10 more per student to cover additional mandates from the state Department of Education, including the hardware and software required to administer a new set of standardized tests, the Partnership for Assessment of Readiness for College and Careers (PARCC). On paper, the SFRA formula’s carefully developed determinations of education costs and appropriate funding levels remained intact, but the underfunding of the formula resulted in substantial state aid shortfalls across all districts. Funding disparities between the 31 low-wealth Abbott districts and the wealthy suburban districts re-emerged. In the 2016–17 school year, state aid was only 1% higher than in 2008–09. The Education Law Center, the non-profit law firm that brought the Abbott v. Burke suit, estimates that New Jersey’s schools suffered an accumulated funding deficit of more than $8 billion from 2010 to 2017.20

The years of underfunding left many New Jersey schools struggling to provide students with necessary resources. Many districts cut essential programs, staff, and services. Flat or decreased funding left growing districts without additional aid to cover the cost of educating new students. SFRA implementation was intended to bring all school districts to “adequacy” (the level of spending deemed necessary to give all students an education that would enable them to meet state curriculum standards) but because of underfunding, the number of districts spending below adequacy grew. Meanwhile, so-called “adjustment aid” (hold-harmless funding intended to ensure that no district received less funding under SFRA than under the state’s previous school finance formula) was never phased out, as originally planned; instead, adjustment-aid levels remained unchanged, with no recalculation to reflect districts’ current circumstances. Preschool expansion, which was supposed to have been completed less than six years after SFRA’s enactment, never really began; only four school districts that were ready received expansion funding in 2009.

The budget process for the fiscal year that started July 1, 2017 brought modest good news for New Jersey’s schools: For the first time in eight years, the state’s leaders agreed on a budget that allocated state aid according to the principles established in the SFRA formula, albeit without anything close to full funding. The budget added $100 million in aid for more than 300 school districts while more than 100 districts saw decreased funding, in some cases through cuts in adjustment aid. The final numbers left 216 districts spending below adequacy, up from 125 districts when SFRA was passed. The budget did, however, allocate $25 million for preschool expansion,21 although in October 2017 $5.6 million was diverted to fund the governor’s anti-opioid initiative.

RECOMMENDATION

Distribute full state aid to all school districts in accordance with the SFRA formula.

ASSESSING PROGRESS

When the Supreme Court cleared the way for implementation of the SFRA formula, the justices ordered the state to evaluate the success of the law after three years of full funding, an evaluation called for in the law itself. Those three years of full funding never materialized and neither did the promised evaluation. Although evaluating the law in the absence of full funding remains difficult, some interim assessment of its provisions is necessary.

The school finance formula is nearly a decade old, as are the curricular studies, funding determinations, and research base on which it relied. The program weights and cost estimates that seemed appropriate in 2008 need to be updated. For example, SFRA allocates special education funding to all districts as if 14.69% of the students in each district require special-education services. Research shows “clear differences in the percentages and types of students served in different districts across the state,” and the formula should be adjusted to take those differences into account.22

RECOMMENDATION

Conduct an initial assessment of SFRA’s school funding formula in light of the knowledge gained in nine years of partial implementation. Reconsider SFRA’s census-based special-education funding model.

If necessary, interim changes should be proposed for legislative enactment.

Collect the data necessary for a full-scale evaluation of the formula, to be completed after three years of full funding.